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Q: I’m taking a look at a big capital achieve from shares in a publicly-traded firm the place I labored from 1997 to 2001 and the place I used to be enrolled in a inventory buy and reinvestment plan. Is there any solution to reduce the tax hit once I promote, say by transferring shares to my TFSA, which I’ve barely used? I’m in a excessive tax bracket already. I additionally don’t have data of my common buy value in the course of the employment years, although I’ve stored observe of the dividends and reinvestment costs since then.
A: A big achieve on paper is a nice dilemma, however not having detailed and correct data of your acquisition prices may very well be a significant headache. Should you make an estimate, you’ll have to justify your numbers to tax officers, so attempt to be as correct as potential, which implies doing a little homework. Begin by asking the corporate in query if it has data on share costs throughout your interval of employment and attempt to arrive at a sensible price base in your funding. When you’ve decided your common price per share, you have got a couple of choices. If you wish to keep invested, you may switch shares to your TFSA, supplied their market worth doesn’t exceed your TFSA contribution restrict. Will probably be handled as a disposition and also you’ll must pay capital features tax on the appreciation in worth of these shares on the time of the switch, however any additional features inside the TFSA will probably be tax-free. When you have capital losses from different transactions or present holdings in a loss place, you possibly can use them to offset an equal quantity of capital features from promoting some shares of the inventory that’s executed so effectively. You even have the choice of donating shares to charity, which can produce tax deductions for charitable contributions with no capital features tax. Should you can wait till retirement, you would possibly need to contemplate cashing within the features systematically over a interval of years, presumably as an alternative choice to Outdated Age Safety or Quebec Pension Plan cheques, which might be postpone till 70 with a pleasant bonus for doing so.